Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Roberto Festa Ankle Boot - Women Roberto Festa Ankle Boots online on YOOX United Kingdom - 11491473RQMarco De Vincenzo Sneakers - Women Marco De Vincenzo Sneakers online on YOOX United Kingdom - 11489348CIJust Cavalli Sandals - Women Just Cavalli Sandals online on YOOX United Kingdom - 11098738HCCesare P. Sneakers - Women Cesare P. Sneakers online on YOOX United Kingdom - 11517032NE , mens/womens Satorisan Bywater-Pull Up Leather Sneakers & Athletic Satorisan Won highly appreciated and widely trusted at home and abroad , WOMEN Isaac Mizrahi Purple Formal Shoes Attractive fashion , WOMEN Me Too Sadie Sandal Wedges Cheap order , women Stuart Weitzman Black Sandal Platforms environmentally friendly24HORAS 23028 WEDGE ANKLE BOOTS FOR WOMENVULCASA A426163 Negro FASHION FOOTWEAR FOR WOMENPier One Winter boots - yellowReplay ARDMORE - High-top trainers Colour: blackmen/women Vaneli Petal Heels selling pricePublic Desire MAMBA - High heeled sandals Colour: natural , Adidas Billi Bi 5856 - Cowboy/Biker boots - black country , Inov-8 ARCTICTALON 275 - Trail running shoes - blue green/black , Puma IGNITE LIMITLESS 2 UNREST - Trainers - forest night/firecrackerAuguste Court - Women Auguste Courts online on YOOX United Kingdom - 11509904UB , Ebarrito Loafers - Women Ebarrito Loafers online on YOOX United Kingdom - 11554946JP , Bams Court - Women Bams Courts online on YOOX United Kingdom - 11442153DW , Deimille Court - Women Deimille Courts online on YOOX United Kingdom - 11562336UPSchutz Sandals - Women Schutz Sandals online on YOOX United Kingdom - 11177210KA , Corvari Ankle Boot - Women Corvari Ankle Boots online on YOOX United Kingdom - 11501517IA , Divine Follie Sandals - Women Divine Follie Sandals online on YOOX United Kingdom - 11570466CF , Giuseppe Zanotti Loafers - Men Giuseppe Zanotti Loafers online on YOOX United Kingdom - 11447395UA , sj4ZzhDe PITILLOS 1215 SHOES FOR WOMEN , Many styles Corral Boots A3228WOMENS adidas Orange Gazelle Sneakers New varieties are introducedGivenchy Multi-color Womens Fashion Sneaker Be08013886 Sneakers , MISS BCBGMAXAZRIA Orange Bcbg Platforms Reasonable price ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.